The great sorting out: U.S. cities polarized along income, education

It’s no surprise the U.S. has become polarized: The blue state and red state divide, both culturally and geographically, seems to harden with every passing year.

A new study of domestic migration reinforces how Americans continue to sort themselves out, in this case, based on location, income, and education.

Characteristics of Domestic Cross-Metropolitan Migrants, by BuildZoom economist Issi Romem, analyzed U.S. Census and Zillow data from 2005-2016 to track migration patterns based on income, age, education, and whether someone was a renter or owner.

Continued stratification between expensive superstar urban centers and the rest of the country shows how polarization has become more pronounced, and how cities and states such as California are, in many ways, gentrifying.

“The most attractive parts of the country are harder to move to these days,” Romem tells Curbed, “and they’re being moved to by the cream of the crop in terms of education and income.”

BuildZoom

BuildZoom

Romem presents evidence of what he calls “positive income sorting”: more wealthy, high-income professionals move into expensive cities, a new crop of buyers that helps prop up rising home prices and push out those who can’t afford them. That these migration patterns are having a significant impact on urban real estate isn’t news. But Romem’s analysis offers a closer look at how these forces affect who moves in and out of expensive metros.

For instance, Romem found a greater prevalence among urban in-migrants of dual-earner couples, and statistics suggest households with fewer earners, such as single-parent families, may be leaving. He held up Sacramento, which has fewer earners per household among its in-migrants than its out-migrants, as an example, due in part, he surmises, to its role as a destination for Bay Area residents looking for cheaper housing.

As these cities continue swapping out low-income residents for higher-earning ones, it even makes some measures of affordability moot, since cities are skewing toward wealthier residents. The continued clustering of highly educated workers in expensive metros only helps to “widen the existing rift.”

BuildZoom

BuildZoom

Romem goes so far as to say these migration patterns have created a new class distinction between renters and current property owners, who benefit from seemingly endless future demand. In-migrants to metros could even be considered a sort of “transient class,” arriving in big cities as adults, but unable to gain a permanent foothold due to property values.

Romem believes that cities have three directions to take when it comes to housing costs and growth: densify without sprawl, which will lower prices; encourage sprawl, which lowers prices without densification; or refuse to density and sprawl, which then pushes up rent. California cities, especially in the Bay Area, have chosen the last of these options. Without significant densification, zoning changes, or housing construction, the influx of wealthy buyers will continue to prop up housing prices.

Will this constant sorting on income, class, and education, as well as the run-up in property value, eventually knock some of these superstar cities off their perch? Romem says that it’s not a problem to be worried about tomorrow, but it is an issue in the long run. As long as venture capital continues to disproportionately flow into places such as San Francisco, and there is enough talent, and enough parts of the value chain, to create and launch companies, there’s no immediate danger. But long-term, the trend will be toward more clusters of talent and money, in metros such as Austin, Denver, and D.C., that will slowly become viable challengers to these established cities.